The monthly jobs report was released this morning and payroll employment soared past expectations. Total job growth was 321,000 with private payrolls up 314,000. Economists were looking for total job growth of 230,000. More meaningfully, the six month moving average of private payroll employment reached the highest point of the recovery. The Fed needs to explain why it is still running and promising to run emergency monetary policy that inflicts undue pain on retired investors and savers while the economic growth is humming along just fine. … [Read more...]
Auto Sales Booming
Auto sales are booming. For November auto sales came in at an annual rate of over 17 million units. That is the best November since 2001. That’s the good news. The bad news is that with car sales already at 17 million units, much of the juice has been squeezed out of the lemon. Auto sales have provided a nice boost to GDP since the recovery began, but at this stage of the business cycle autos are going to contribute less and less to growth. … [Read more...]
Wisdom from a Market Veteran
Below are some excerpts from a speech that Bob Rodriguez, the CEO of First Pacific Advisors gave at a recent CFA event. Rodriguez isn’t a household name like Warren Buffet, but he achieved one of the most successful mutual fund records in history. Rodriguez managed the FPA Capital fund from 1984 until 2009. During this period, FPA Capital outperformed various measures of stock market performance by 400 to 600 basis points and was the #1 diversified equity fund for that period. Rodriguez takes a more concentrated approach than is appropriate for many investors, but his insights on investing … [Read more...]
Kill the Squid.
In a 400-page report prepared for a Senate hearing on commodities market rigging, Goldman Sachs (aka the Vampire Squid of Wall Street) was again being accused of questionable business practices. According to the Senate report, Wall Street banks may have manipulated commodities markets raising the costs on consumers. Add this to the long list of Goldman’s other indictments and it becomes clear that it is time for regulators to kill the squid. Goldman should be stripped of its bank holding status and turned back into a pure investment bank. Investors, lenders, and the market can then more … [Read more...]
These are the Most Popular Stocks on Wall Street
What is popular on Wall Street? The table below lists the most followed stocks in the S&P 500. These aren't necessarily the stocks with the highest analyst ratings, they are the stocks with the most analyst coverage. According to Bloomberg, there are 61 analysts following Apple, 57 following Google, and 55 following Facebook. What possible value does the 35th analyst following Apple add, let alone the 61st, that the 34th analyst has missed? Seems like an awful waste of time and effort. Looks more like a who’s-who of speculation than a list of stocks that a long-term investor would … [Read more...]
A Furious Rally
The S&P 500 has rallied furiously from its October 15th low. Over the last 24 trading days, the index has gained 10.1%--the largest such gain in over three years. Are stocks overbought at these levels? You can be the judge of that. … [Read more...]
2% Yields: It Could be Worse
If you thought you had it bad with 10-year Treasury yields at 2.3%, take a gander across the pond. In Germany, 10-year government bonds yield only 0.80%. It would take 87 years to double your money at a 0.80% return. That is more than a life-time for many. The comparable number for the 2.3% return available on 10-year Treasuries is about 30 years. Still not great, but it could be worse. It could be worse for the Germans too. In Japan, the ten-year government bond yields only 0.48%. At 0.48% you would need two life-times to double your money. … [Read more...]
Where do Stocks go from Here?
As measured by the Dow Jones Industrial Average, the current bull market is over 2,000 days old—2,074 to be exact. That is the fourth longest bull market in the last century. How have stocks fared once they have reached the age of 2,074? In terms of duration, every bull market that has lasted for 2,074 days, went on to last at least another two years. And the subsequent gains for the three bull markets that lasted longer than 2,074 days were all substantial. That’s the good news. The bad news is that the performance of stocks from day 2,074 of a bull market to the subsequent stock market … [Read more...]
Robbing Peter to Employ Paul
The October jobs report was released today. The headline payroll employment number came in at 214,000, slightly below economist expectations, but a good number nonetheless. The prior two months of non-farm payrolls were revised up by a total of 31,000. Over the last six months payroll employment growth in the U.S. has averaged a healthy 235,000. The unemployment rate also came down. Using the Bureau of Labor Statistics (BLS) headline number, the unemployment rate ticked down a tenth of a point, but when you take the data out another decimal point, you find that the unemployment rate fell … [Read more...]
Currency Wars Continue
The global central banks regularly deny that they are engaged in competitive currency devaluations, but actions speak louder than words. Last week the Bank of Japan ramped up their quantitative easing program by taking advantage of falling oil prices to further debase the yen. A falling yen raises the price of gasoline for Japanese consumers so there had been some backlash against the BOJ’s quantitative easing program. With oil prices falling, the BOJ saw an opportunity to further debase the yen without causing more voter discontent and they took it. The lower yen is a boon for Japanese … [Read more...]
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